Do I have to pay VAT when mining cryptocurrency for myself in the UAE?

No, you don’t pay VAT when you mine for your own account, because you’re not making a taxable supply.

When do I have to charge VAT for mining services?

If you mine for someone else and get paid, you must charge VAT at the standard rate or zero rate, depending on the customer’s location.

How does a UAE business handle VAT for mining services received from abroad?

If you’re registered for VAT, you use the reverse charge mechanism to account for VAT on foreign mining services.

How is VAT Charged on Cryptocurrency Mining Services

How is VAT Charged on the Cryptocurrency Mining Services?

The UAE uses new technology before most countries. The UAE accepts cryptocurrency trading and lets people trade and mine crypto with proper legal rules. This has made cryptocurrency very popular, and now many people trade and mine crypto. Because of this, many ask about VAT rules for mining.
This article explains the VAT treatment for cryptocurrency mining using the proof-of-work method.

What is Meant By The Mining of Cryptocurrency?

Cryptocurrency mining means a person uses powerful computers called mining rigs to check transactions in the blockchain. When the miner solves the math problem, he gets a reward. The miner can mine for himself or for someone else. Most times, the reward comes from the network and is not given by a direct customer.

Key points:

Miners use computers to check blockchain transactions.
Miners may work for themselves or others.
Rewards are usually paid by the network.

VAT on Cryptocurrency Mining For Own Account

VAT is 5% on taxable supplies. If someone mines crypto only for his own benefit, he adds power to the network. He’ll get a reward only if he solves the problem first. In this case, there’s no sure reward and no direct customer.

Mining for yourself isn’t counted as a taxable supply.
The reward is not VAT consideration.
The miner doesn’t charge or pay VAT on his reward.

VAT on Cryptocurrency Mining on Behalf of Another Person

If a person mines for someone else and gets a fee, this counts as a taxable service. The service is then charged VAT at the standard rate.

Mining for others is a taxable service.
If the service is for a non-resident and meets zero-rated rules, it can be zero-rated.

How is VAT Charged On The Receipt of Mining Services?

If a business in the UAE receives mining services from a non-resident, the business must pay VAT.
If the business is VAT-registered, it uses the reverse charge mechanism.

UAE businesses getting mining services from abroad must use reverse charge if registered.
If the customer isn’t registered, the supplier must register for VAT.

Businesses can also file for VAT returns if they meet the needed rules.

How Mubarak Al Ketbi Chartered Accountants Can Help

Mubarak Al Ketbi Chartered Accountants helps with all tax matters about crypto in the UAE. Our experts help you understand VAT rules, file returns, and stay compliant. We explain every detail so you don’t miss a beat—because when it comes to crypto taxes, we help you hit the ground running!

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